Cannabis company The Green Organic Dutchman (The Green Organic Dutchman Stock Quote, Chart TSX:TGOD) could be poised to take a significant chunk out of the marijuana market, according to investment coach Tim Nash of Good Investment, who argues that as the only certified organic pot company around, TGOD could capitalize on cannabis culture’s apparent bent towards naturally sourced products.
Like many of the pot companies, TGOD has had a great start to 2019, in its case rising 85 per cent since January 1. Now trading in the mid-$4.00 range, the stock is well off its high of $10.24 set last September, but there are reasons to be bullish on the name.
Last month, the company got the nod from Wall Street investment bank Jefferies in its coverage launch of the cannabis space, where TGOD was one of five Buys listed. (They initiated coverage on nine companies.) Rather than trying to be all things to all pot consumers, concentrating on the organic market could be rewarding, according to Jefferies, who gave the stock a price target of $4.65 per share.
Nash agrees. “This is a really interesting cannabis company. It’s the only one that’s certified organic,” he says, in conversation with BNN Bloomberg last Thursday.
“What it comes down to is that the market is still so young on [cannabis], so for consumers that are buying online, I don’t see a huge amount of differentiation involved. What I’m curious to see is once those stores are available and people can go in and touch it and smell it, are they going to have a preference for an organic cannabis option? If the answer is yes, then this company is very, very well situated to capitalize on it,” Nash says.
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Last spring, Toronto-based The Green Organic Dutchman had the largest-to-date IPO for a Canadian cannabis company by raising $132 million. The company has plans to build out to a capacity of 170,000 kg of pot production, potentially putting it among the top-producing companies, with expansion plans in Ontario, Quebec and Jamaica.
“There’s an ETF that’s based on organic food, the Organics ETF, and for the first time I’ve seen the Green Organic Dutchman inside that ETF,” says Nash, “which tells me that people are catching on and that this is going to be a standout in the cannabis field.”